Poverty dynamics, ecological endowments, and land use among smallholders in the Brazilian Amazon

• Cumulative time spent in poverty is simulated using Markovian processes.
• Accessibility to markets and land use are key for decreasing poverty.
• Improvements on existing road networks could improve human well-being.
• Institutional promotion of commercial land use would increase social mobility.

Rural settlement in previously sparsely occupied areas of the Brazilian Amazon has been associated with high levels of forest loss and unclear long-term social outcomes. We focus here on the micro-level processes in one settlement area to answer the question of how settler and farm endowments affect household poverty. We analyze the extent to which poverty is sensitive to changes in natural capital, land use strategies, and biophysical characteristics of properties (particularly soil quality). Cumulative time spent in poverty is simulated using Markovian processes, which show that accessibility to markets and land use system are especially important for decreasing poverty among households in our sample. Wealtheir households are selected into commercial production of perennials before our initial observation, and are therefore in poverty a lower proportion of the time. Land in pasture, in contrast, has an independent effect on reducing the proportion of time spent in poverty. Taken together, these results show that investments in roads and the institutional structures needed to make commercial agriculture or ranching viable in existing and new settlement areas can improve human well-being in frontiers.